Kira Jordan – Page 6 – Via Renewables

Spark Energy, Inc. Reports Full Year and Fourth Quarter 2015 Financial Results, Provides 2016 Update

Posted on March 23, 2016October 19, 2021 by Kira Jordan

HOUSTON, March 23, 2016 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), today reported financial results for the year ended December 31, 2015.

For 2015, Adjusted EBITDA was $36.9 million and Retail Gross Margin was $113.6 million on revenue of $358.2 million, compared to Adjusted EBITDA of $11.3 million and Retail Gross Margin of $76.9 million for 2014. Spark invested $19.9 million in organic customer acquisition costs in 2015 compared to $26.2 million in 2014.

For the fourth quarter of 2015, Adjusted EBITDA was $16.3 million and Retail Gross Margin was $34.4 million on revenue of $94.8 million, compared to Adjusted EBITDA of $5.0 million and Retail Gross Margin of $26.8 million for the fourth quarter of 2014.

“We are very pleased with our 2015 results,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “With continued enhanced margins in our retail electricity and retail natural gas segments, along with three transactions during the year, we delivered $36.9 million in Adjusted EBITDA in 2015, along with $113.6 million of Retail Gross Margin. In terms of customer count, we were able to grow by 9%, and on an RCE basis, we grew by 27%. As we move through the first quarter of 2016, we continue to see strong results.”

2015 Highlights

$36.9 million in Adjusted EBITDA and $113.6 million in Retail Gross Margin
Invested $19.9 million in organic customer acquisitions
Closed CenStar Energy and Oasis Energy transactions
Completed book purchase of approximately 26,000 Entrust Energy customers
Consistently strong unit margins across both retail natural gas and electricity segments
Increased customer count from 318,000 to 347,000
Increased RCE count from 326,000 to 415,000
Amended and restated existing senior credit facility
Paid annual dividend of $1.45 per share of Class A common stock

Summary Full Year 2015 Financial Results

For the year ended December 31, 2015, Spark reported Adjusted EBITDA of $36.9 million on $358.2 million of revenue compared to Adjusted EBITDA of $11.3 million for the year ended December 31, 2014. This increase of $25.6 million is primarily attributable to increased Retail Gross Margin and decreased customer acquisition spending, partially offset by increased general and administrative expenses.

For the year ended December 31, 2015, Spark reported Retail Gross Margin of $113.6 million compared to Retail Gross Margin of $76.9 million for the year ended December 31, 2014. This increase of $36.7 million is primarily attributable to increased unit margins in both our retail electricity and retail natural gas segments, which were positively impacted by expanded spot margins from the overall lower commodity price environment, and increased volume in our retail electricity segment, which was primarily driven by our CenStar and Oasis acquisitions.

Net income for the year ended December 31, 2015 was $26.0 million, or $1.06 of diluted earnings per share of Class A common stock (“EPS”). An unrealized gain on the hedge portfolio valuation of our future supply positions positively impacted net income by $1.0 million and EPS by $0.07. Net income and EPS for the year ended December 31, 2014 were $(4.3) million and $(0.02), respectively.

Summary Fourth Quarter 2015 Financial Results

For the quarter ended December 31, 2015, Spark reported Adjusted EBITDA of $16.3 million on $94.8 million of revenue compared to Adjusted EBITDA of $5.0 million for the quarter ended December 31, 2014. This increase of $11.3 million is primarily attributable to increased Retail Gross Margin in our electricity segment, decreased customer acquisition costs, and earnings from our CenStar Energy and Oasis Energy acquisitions, partially offset by increased general and administrative expenses.

For the quarter ended December 31, 2015, Spark reported Retail Gross Margin of $34.4 million compared to Retail Gross Margin of $26.8 million for the quarter ended December 31, 2014. This increase of $7.6 million is primarily attributable to expanded retail electricity and retail natural gas unit margins and increased retail electricity volumes. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in the fourth quarter.

Net income and EPS for the quarter ended December 31, 2015 were $3.1 million and $(0.01), respectively. An unrealized loss on the hedge portfolio valuation of our future supply positions negatively impacted net income by $(3.6) million and EPS by $(0.09). Net income and EPS for the quarter ended December 31, 2014 were $(11.4) million and $(0.37), respectively.

M&A Update

We successfully acquired and integrated two stock purchases in 2015, as well as a book of customers, and we continue to evaluate additional M&A opportunities. In 2015, our founder implemented a “drop-down strategy” pursuant to which our affiliate would acquire retail energy providers which could potentially be offered to us. This drop-down strategy affords the Company access to opportunities that might not otherwise be available to us due to our size and availability of capital. As a part of this strategy, we acquired Oasis Energy from an affiliate in the third quarter. Both the Oasis and CenStar acquisitions have exceeded our expectations in terms of customer growth and profitability.

2016 Financial Guidance

Financial guidance is reaffirmed for 2016, consisting of Adjusted EBITDA in the range of $44 million to $48 million, based upon projected customer acquisition costs of $13 million to $17 million. Our 2016 financial guidance does not include the benefit of any potential M&A transactions in 2016 and assumes that any potential effect from the recent New York Public Service Commission order will not significantly affect our 2016 earnings guidance (see below).

Recent New York State Public Service Commission Order

On February 23, 2016, the New York Public Service Commission (NYPSC) issued an order enacting new restrictions on retail energy providers (REPs) operating in New York. A temporary restraining order to block implementation of the NYPSC’s order has been granted until April 14, 2016. Although the Company believes that the NYPSC and the REPs will reach a mutually beneficial resolution, it is difficult to predict the outcome at this time. As of December 31, 2015, customers potentially affected by the New York order represented approximately 10% of the Company’s RCEs.

Liquidity and Capital Resources

(in thousands)	December 31, 2015
Cash and cash equivalents	$	4,474
Senior Credit Facility Working Capital Line Availability⁽¹⁾		15,950
Senior Credit Facility Acquisition Line Availability⁽²⁾		5,102
Total Liquidity	$	25,526
⁽¹⁾ Subject to Senior Credit Facility borrowing base restrictions.
⁽²⁾ Subject to Senior Credit Facility covenant restrictions.

Conference Call and Webcast

Spark will host a conference call to discuss full year 2015 results on Thursday, March 24, 2016 at 10:00 AM Central Time (11:00 AM Eastern).

A live webcast of the conference call can be accessed from the Events & Presentations page of the Spark Energy Investor Relations website at http://ir.sparkenergy.com/events.cfm. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Cautionary Note Regarding Forward-Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this report are subject to risks and uncertainties. Important factors which could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

changes in commodity prices,
extreme and unpredictable weather conditions,
the sufficiency of risk management and hedging policies,
customer concentration,
federal, state and local regulation, including the industry’s ability to prevail on its challenge to the New York Public Service Commission’s order enacting new regulations that sought to impose significant new restrictions on retail energy providers operating in New York,
key license retention,
increased regulatory scrutiny and compliance costs,
our ability to borrow funds and access credit markets,
restrictions in our debt agreements and collateral requirements,
credit risk with respect to suppliers and customers,
level of indebtedness,
changes in costs to acquire customers,
actual customer attrition rates,
actual bad debt expense in non-POR markets,
accuracy of internal billing systems,
ability to successfully navigate entry into new markets,
whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
competition, and
other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014, our Form 10-Q for the quarter ended September 30, 2015 and in our other public filings and press releases.

You should review the risk factors and other factors disclosed throughout our Report on Form 10-K for the year ended December 31, 2014 and the Form 10-Q for the quarter ended September 30, 2015, both of which are filed with the Securities and Exchange Commission, which could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SPARK ENERGY, INC.
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2015 AND DECEMBER 31, 2014
(in thousands)

	December 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	4,474		$	4,359
Restricted cash		–			707
Accounts receivable, net of allowance for doubtful accounts of $1.9 million and $8.0 million as of December 31, 2015 and 2014, respectively		59,936			63,797
Accounts receivable—affiliates		1,840			1,231
Inventory		3,665			8,032
Fair value of derivative assets		605			216
Customer acquisition costs, net		13,389			12,369
Customer relationships, net		6,627			486
Prepaid assets ⁽¹⁾		700			1,236
Deposits		7,421			10,569
Other current assets		4,023			2,987
Total current assets		102,680			105,989
Property and equipment, net		4,476			4,221
Customer acquisition costs, net		3,808			2,976
Customer relationships, net		6,802			1,015
Deferred tax assets		23,380			24,047
Goodwill		18,379			–
Other assets		2,709			149
Total Assets	$	162,234		$	138,397
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	29,732		$	38,210
Accounts payable—affiliates		1,962			1,017
Accrued liabilities		12,245			7,195
Fair value of derivative liabilities		10,620			11,526
Current portion of Senior Credit Facility		27,806			33,000
Current deferred tax liability		853			–
Other current liabilities		1,823			1,868
Total current liabilities		85,041			92,816
Long-term liabilities:
Fair value of derivative liabilities		618			478
Payable pursuant to tax receivable agreement—affiliates		20,713			20,767
Long-term portion of Senior Credit Facility		14,592			–
Convertible subordinated notes to affiliates		6,339			–
Other long-term liabilities		1,612			219
Total liabilities		128,915			114,280
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,118,623 issued and outstanding at December 31, 2015 and 3,000,000 issued and outstanding at December 31, 2014		31			30
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at December 31, 2015 and 2014		108			108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at December 31, 2015 and 2014		–			–
Additional paid-in capital		12,565			9,296
Retained deficit		(1,366	)		(775	)
Total stockholders’ equity		11,338			8,659
Non-controlling interest in Spark HoldCo, LLC		21,981			15,458
Total equity		33,319			24,117
Total Liabilities and Stockholders’ Equity	$	162,234		$	138,397
⁽¹⁾ Prepaid assets includes prepaid assets—affiliates of $210 as of December 31, 2015. See Note 13 “Transactions with Affiliates” for further discussion.

SPARK ENERGY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 and 2013
(in thousands, except per share data)

	Year Ended December 31,
		2015			2014			2013
Revenues:
Retail revenues ⁽¹⁾	$	356,659		$	320,558		$	316,776
Net asset optimization revenues ⁽²⁾		1,494			2,318			314
Total Revenues		358,153			322,876			317,090
Operating Expenses:
Retail cost of revenues ⁽³⁾		241,188			258,616			233,026
General and administrative ⁽⁴⁾		61,682			45,880			35,020
Depreciation and amortization		25,378			22,221			16,215
Total Operating Expenses		328,248			326,717			284,261
Operating income (loss)		29,905			(3,841	)		32,829
Other (expense)/income:
Interest expense		(2,280	)		(1,578	)		(1,714	)
Interest and other income		324			263			353
Total other expenses		(1,956	)		(1,315	)		(1,361	)
Income (loss) before income tax expense		27,949			(5,156	)		31,468
Income tax expense (benefit)		1,974			(891	)		56
Net income (loss)	$	25,975		$	(4,265	)	$	31,412
Less: Net income (loss) attributable to non-controlling interests		22,110			(4,211	)		–
Net income (loss) attributable to Spark Energy, Inc. stockholders	$	3,865		$	(54	)	$	31,412
Other comprehensive income (loss):
Deferred gain from cash flow hedges		–			–			2,620
Reclassification of deferred loss from cash flow hedges into net income		–			–			(84	)
Comprehensive income (loss)	$	25,975		$	(4,265	)	$	33,948

Net income (loss) attributable to Spark Energy, Inc. per common share
Basic	$	1.26		$	(0.02	)
Diluted	$	1.06		$	(0.02	)

Weighted average commons shares outstanding
Basic		3,064			3,000
Diluted		3,327			3,000
⁽¹⁾ Retail revenues includes retail revenues—affiliates of $0, $2,170 and $4,022 for the years ended December 31, 2015, 2014 and 2013, respectively.
⁽²⁾ Net asset optimization revenues includes asset optimization revenues—affiliates of $1,101, $12,842 and $14,940 for the years ended December 31, 2015, 2014 and 2013, respectively, and asset optimization revenues—affiliates cost of revenues of $11,285, $30,910 and $15,928 for the years ended December 31, 2015, 2014 and 2013, respectively.
⁽³⁾ Retail cost of revenues includes retail cost of revenues—affiliates of $17, $13 and $55 for the years December 31, 2015, 2014 and 2013, respectively.
⁽⁴⁾ General and administrative includes general and administrative expense—affiliates of $0, less than $100 and less than $100 for the years ended December 31, 2015, 2014 and 2013, respectively.

SPARK ENERGY, INC.
COMBINED AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 and 2013
(in thousands)

Member’s Equity

Issued Shares of Class A Common Stock

Issued Shares of Class B Common Stock

Issued Shares of Preferred Stock

Class A Common Stock

Class B Common Stock

Accumulated Other Comprehensive Income

Additional Paid-In Capital

Retained Deficit

Total Stockholders’ Equity

Non-controlling Interest

Total Equity

Balance at 12/31/2012:

63,838

–

(2,536

)

–

61,302

Capital contributions from member

12,400

–

12,400

Distributions to member

(71,737

)

–

(71,737

)

Net income

31,412

–

31,412

Deferred gain from cash flow hedges

–

2,620

–

2,620

Reclassification of deferred loss from cash flow hedges into net income

–

(84

)

–

(84

)

Balance at 12/31/2013:

35,913

–

35,913

Capital contributions from member and liabilities retained by affiliate

54,201

–

54,201

Distributions to member

(61,607

)

–

(61,607

)

Net loss prior to the IPO

(21

)

–

(21

)

Balance prior to Corporate Reorganization and the IPO:

28,486

–

28,486

Reorganization Transaction:

Issuance of Class B common stock

(28,486

)

–

10,750

–

108

–

28,378

–

28,486

–

IPO Transactions:

IPO costs paid

–

(2,667

)

–

(2,667

)

–

(2,667

)

Issuance of Class A Common Stock, net of underwriters discount

–

3,000

–

50,190

–

50,220

–

50,220

Distribution of IPO proceeds and payment of note payable to affiliate

–

(47,604

)

–

(47,604

)

–

(47,604

)

Initial allocation of non-controlling interest of Spark Energy, Inc. effective on date of IPO

–

(22,232

)

–

(22,232

)

22,232

–

Tax benefit from tax receivable agreement

–

23,636

–

23,636

–

23,636

Liability due to tax receivable agreement

–

(20,915

)

–

(20,915

)

–

(20,915

)

Balance at inception of public company (8/1/2014):

–

3,000

10,750

–

108

–

8,786

–

8,924

22,232

31,156

Stock based compensation

–

510

–

510

–

510

Consolidated net loss subsequent to the IPO

–

(54

)

(54

)

(4,190

)

(4,244

)

Distributions paid to Class B non-controlling unit holders

–

(2,584

)

(2,584

)

Dividends paid to Class A common shareholders

–

(721

)

(721

)

–

(721

)

Balance at 12/31/2014:

–

3,000

10,750

–

108

–

9,296

(775

)

8,659

15,458

24,117

Stock based compensation

–

2,165

–

2,165

–

2,165

Restricted stock unit vesting

–

119

–

186

–

187

–

187

Contribution from NuDevco

–

129

–

129

–

129

Consolidated net income

–

3,865

22,110

25,975

Beneficial conversion feature

–

789

–

789

–

789

Distributions paid to Class B non-controlling unit holders

–

(15,587

)

(15,587

)

Dividends paid to Class A common shareholders

–

(4,456

)

(4,456

)

–

(4,456

)

Balance at 12/31/2015:

–

3,119

10,750

–

108

–

12,565

(1,366

)

11,338

21,981

33,319

SPARK ENERGY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013
(in thousands)

	Year Ended December 31,
		2015			2014			2013
Cash flows from operating activities:
Net income (loss)	$	25,975		$	(4,265	)	$	31,412
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization expense		25,378			22,221			16,215
Deferred income taxes		1,340			(1,064	)		–
Stock based compensation		3,181			858			–
Amortization and write off of deferred financing costs		412			631			678
Bad debt expense		7,908			10,164			3,101
Loss (gain) on derivatives, net		18,497			14,535			(6,567	)
Current period cash settlements on derivatives, net		(23,948	)		3,479			(1,040	)
Other		(1,320	)		–			–
Changes in assets and liabilities:
Decrease (increase) in restricted cash		707			(707	)		–
Decrease (increase) in accounts receivable		7,876			(11,283	)		6,338
(Increase) decrease in accounts receivable—affiliates		(608	)		5,563			13,369
Decrease (increase) in inventory		4,544			(3,711	)		(599	)
Increase in customer acquisition costs		(19,869	)		(26,191	)		(8,257	)
Decrease (increase) in prepaid and other current assets		10,845			(6,905	)		(1,917	)
(Increase) decrease in other assets		(1,101	)		(90	)		144
Increase in customer relationships and trademarks		(2,776	)		(1,545	)		–
(Decrease) increase in accounts payable and accrued liabilities		(13,307	)		1,449			(7,879	)
Increase in accounts payable—affiliates		944			1,017			–
(Decrease) increase in other current liabilities		(645	)		1,867			(518	)
Decrease (increase) in other non-current liabilities		1,898			(149	)		–
Net cash provided by operating activities		45,931			5,874			44,480
Cash flows from investing activities:
Acquisitions of CenStar and Oasis		(39,847	)		–			–
Purchases of property and equipment		(1,766	)		(3,040	)		(1,481	)
Contribution to equity method investment in eRex Spark		(330	)		–			–
Net cash used in investing activities		(41,943	)		(3,040	)		(1,481	)
Cash flows from financing activities:
Borrowings on notes payable		59,224			78,500			80,000
Payments on notes payable		(49,826	)		(44,000	)		(62,500	)
Issuance of convertible subordinated notes to affiliate		7,075			–			–
Restricted stock vesting		(432	)		–			–
Contributions from NuDevco		129			–			–
Deferred financing costs		–			(402	)		(532	)
Member contribution (distributions), net		–			(36,406	)		(59,337	)
Proceeds from issuance of Class A common stock		–			50,220			–
Distributions of proceeds from IPO to affiliate		–			(47,554	)		–
Payment of note payable to NuDevco		–			(50	)		–
IPO costs		–			(2,667	)		–
Payment of distributions to Class B non-controlling unit holders		(15,587	)		(2,584	)		–
Payment of dividends to Class A common shareholders		(4,456	)		(721	)		–
Net cash used in financing activities		(3,873	)		(5,664	)		(42,369	)
Increase (decrease) in cash and cash equivalents		115			(2,830	)		630
Cash and cash equivalents—beginning of period		4,359			7,189			6,559
Cash and cash equivalents—end of period	$	4,474		$	4,359		$	7,189
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Issuance of Class B common stock	$	–		$	28,486		$	–
Liabilities retained by affiliate	$	–		$	29,000		$	–
Tax benefit from tax receivable agreement	$	(64	)	$	23,636		$	–
Liability due to tax receivable agreement	$	(55	)	$	20,767		$	–
Initial allocation of non-controlling interest	$	–		$	22,232		$	–
Property and equipment purchase accrual	$	45		$	19		$	–
CenStar Earnout accrual	$	500		$	–		$	–
Cash paid during the period for:
Interest	$	1,661		$	860		$	879
Taxes	$	216		$	85		$	195

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 and 2013
(in millions, except per unit operating data)
(unaudited)

	Year Ended December 31,
		2015			2014			2013
Retail Natural Gas Segment
Total Revenues	$	128.7		$	146.5		$	125.2
Retail Cost of Revenues		70.5			109.2			83.1
Less: Net Asset Optimization Revenues		1.5			2.3			0.3
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		3.3			(9.3	)		(0.6	)
Retail Gross Margin—Gas	$	53.4		$	44.3		$	42.4
Volumes—Gas (MMBtu’s)		14,786,681			15,724,708			16,598,751
Retail Gross Margin—Gas per MMBtu	$	3.61		$	2.82		$	2.55
Retail Electricity Segment
Total Revenues	$	229.5		$	176.4		$	191.9
Retail Cost of Revenues		170.7			149.5			149.9
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		(1.4	)		(5.7	)		2.7
Retail Gross Margin—Electricity	$	60.2		$	32.6		$	39.3
Volumes—Electricity (MWh’s)		2,075,479			1,526,652			1,829,657
Retail Gross Margin—Electricity per MWh	$	29.03		$	21.37		$	21.48

Reconciliation of GAAP to Non-GAAP Measures

Adjusted EBITDA

We define “Adjusted EBITDA” as EBITDA less (i) customer acquisition costs incurred in the current period, (ii) net gain (loss) on derivative instruments, and (iii) net current period cash settlements on derivative instruments, plus (iv) non-cash compensation expense and (v) other non-cash operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. For example, our Adjusted EBITDA is lower in years of customer growth reflecting larger customer acquisition spending. We do not deduct the cost of customer relationships (representing those customer acquisitions through acquisitions of business or portfolios of customers). We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan.

We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our liquidity and financial condition and results of operations and that Adjusted EBITDA is also useful to investors as a financial indicator of a company’s ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:

our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
the ability of our assets to generate earnings sufficient to support our proposed cash dividends; and
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt.

Retail Gross Margin

We define retail gross margin as operating income (loss) plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues, (ii) net gains (losses) on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. Retail gross margin is included as a supplemental disclosure because it is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity business by removing the impacts of our asset optimization activities and net non-cash income (loss) impact of our economic hedging activities. As an indicator of our retail energy business’ operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.

The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income (loss). Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income (loss), net cash provided by operating activities, or operating income (loss). Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider Adjusted EBITDA or Retail Gross Margin in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and are defined differently by different companies in our industry, our definition of Adjusted EBITDA and Retail Gross Margin may not be comparable to similarly titled measures of other companies.

Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process.

The following tables present a reconciliation of Adjusted EBITDA to net income (loss) and net cash provided by operating activities for each of the periods indicated.

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)

	Year Ended December 31,						Quarter Ended December 31,
		2015			2014			2015			2014
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss)	$	25,975		$	(4,265	)	$	3,132		$	(11,394	)
Depreciation and amortization		25,378			22,221			7,505			11,897
Interest expense		2,280			1,578			865			428
Income tax expense (benefit)		1,974			(891	)		374			(1,668	)
EBITDA		55,607			18,643			11,876			(737	)
Less:
Net, Losses on derivative instruments		(18,497	)		(14,535	)		(12,379	)		(14,797	)
Net, Cash settlements on derivative instruments		20,547			(3,479	)		7,660			3,773
Customer acquisition costs		19,869			26,191			2,144			5,825
Plus:
Non-cash compensation expense		3,181			858			1,807			496
Adjusted EBITDA	$	36,869		$	11,324		$	16,258		$	4,958

	Year Ended December 31,						Quarter Ended December 31,
		2015			2014			2015			2014
Reconciliation of Adjusted EBITDA to net cash provided by (used in) operating activities:
Net cash provided by operating activities	$	45,931		$	5,874		$	6,256		$	(6,091	)
Amortization of deferred financing costs		(412	)		(631	)		(117	)		(51	)
Allowance for doubtful accounts and bad debt expense		(7,908	)		(10,164	)		(1,826	)		(6,191	)
Interest expense		2,280			1,578			865			428
Income tax expense (benefit)		1,974			(891	)		375			(1,668	)
Changes in operating working capital
Accounts receivable, prepaids, current assets		(18,820	)		13,332			10,640			24,725
Inventory		4,544			3,711			7,522			(1,627	)
Accounts payable and accrued liabilities		13,008			(2,466	)		(753	)		(7,505	)
Other		(3,728	)		981			(6,704	)		2,938
Adjusted EBITDA	$	36,869		$	11,324		$	16,258		$	4,958
Cash Flow Data:
Cash flows provided by (used in) operating activity	$	45,931		$	5,874		$	6,256		$	(6,091	)
Cash flows (used in) provided by investing activity	$	(41,943	)	$	(3,040	)	$	876		$	(826	)
Cash flows (used in) provided by financing activity	$	(3,873	)	$	(5,664	)	$	(10,013	)	$	8,793

The following table presents a reconciliation of Retail Gross Margin to operating income (loss) for each of the periods indicated.

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)

	Year Ended December 31,						Quarter Ended December 31,
		2015			2014			2015			2014
Reconciliation of Retail Gross Margin to Operating Income (Loss):
Operating income (loss)	$	29,905		$	(3,841	)	$	4,374		$	(12,786	)
Depreciation and amortization		25,378			22,221			7,505			11,897
General and administrative		61,682			45,880			17,773			17,386
Less:
Net asset optimization revenues		1,494			2,318			177			637
Net, Losses on non-trading derivative instruments		(18,423	)		(8,713	)		(12,547	)		(14,560	)
Net, Cash settlements on non-trading derivative instruments		20,279			(6,289	)		7,636			3,670
Retail Gross Margin	$	113,615		$	76,944		$	34,386		$	26,750

Contact: Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

Spark Energy, Inc. Changes Full Year and Fourth Quarter 2015 Conference Call Date to March 24, 2016

Posted on March 4, 2016October 19, 2021 by Kira Jordan

HOUSTON, March 04, 2016 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it has changed the date of its Full Year and Fourth Quarter 2015 conference call to Thursday, March 24 at 10:00 AM Central (11:00 AM Eastern), from the previously scheduled March 29 date. Spark is in a position to file its Form 10-K for the year ended December 31, 2015 earlier than previously anticipated.

About Spark Energy, Inc.

Contact:  Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

Spark Energy, Inc. Announces Strategic Relationship

Posted on December 15, 2015October 19, 2021 by Kira Jordan

HOUSTON, Dec. 15, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”) and a leading retail provider of electricity and natural gas, has entered into a strategic relationship with an affiliate, Retailco Services, LLC (“Retailco”). Retailco was formed by W. Keith Maxwell III, Spark’s founder and majority shareholder, to provide operational services to Spark and other affiliates of Mr. Maxwell. Effective January 1, 2016, Retailco will provide a multitude of Spark’s back office functions including customer operations and information technology services.

“We are extremely excited for many reasons, none more important than believing that Retailco’s services will provide our growing customer base an improved operations platform,” said Nathan Kroeker, Spark’s President and CEO. “The formation of this relationship represents a significant step forward in executing on our long-term M&A and organic growth strategy by providing more streamlined operations. Also, in our continued effort to drive down costs, with Retailco’s proposed increased scale and their plans to reduce the overall cost-to-serve, we expect that Spark will immediately realize approximately 5-8% savings in overall general and administrative expenses.”

Michael Kuznar, a retail energy veteran, has been appointed President of Retailco. “I am excited for the opportunity to lead a high-performing team with goals to provide Spark and its affiliates improved customer services and operations, comprehensive integration services, and improvements in overall cost-to-serve,” said Kuznar.

The master service agreement between the parties was approved by a special committee, formed by the Board of Directors, consisting solely of independent directors. Spark is filing a Form 8-K with the Securities and Exchange Commission in connection with the execution of this agreement that will include a summary of key terms.

About Spark Energy, Inc.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

changes in commodity prices,
extreme and unpredictable weather conditions,
the sufficiency of risk management and hedging policies,
customer concentration,
federal, state and local regulation,
key license retention,
increased regulatory scrutiny and compliance costs,
our ability to borrow funds and access credit markets,
restrictions in our debt agreements and collateral requirements,
credit risk with respect to suppliers and customers,
level of indebtedness,
changes in costs to acquire customers,
actual customer attrition rates,
actual bad debt expense in non-POR markets,
accuracy of internal billing systems,
ability to successfully navigate entry into new markets,
whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
ability to successfully and efficiently integrate acquisitions into our operations,
competition, and
other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014, our quarterly reports on Form 10-Q for 2015 and in our other public filings and press releases.

You should review the risk factors and other factors disclosed throughout our Report on Form 10-K for the year ended December 31, 2014 and the Quarterly Reports on Form 10-Q for 2015, all of which are filed with the Securities and Exchange Commission, which could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Contact: Spark Energy, Inc.

Investors:

Andy Davis, 832-200-3727

Media:

Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

National Gas & Electric, LLC Reaches Agreement to Acquire Northeast Customer Base

Posted on November 24, 2015October 19, 2021 by Kira Jordan

HOUSTON, Nov. 24, 2015 (GLOBE NEWSWIRE) — National Gas & Electric, LLC (“NG&E”) has entered into agreements for the purchase of a Northeast retail customer base from an undisclosed seller operating in over twenty gas and power markets.

W. Keith Maxwell III, CEO of NG&E, commented, “We are excited with our purchase of the Northeast customer base. We have a strong working relationship with this seller and are confident that they will continue to be successful in their growth strategy. This type of parent-level acquisition is a second for our family of retail companies, and we believe there are many similar acquisitions to be executed on in the space.”

Spark Energy, Inc. (“Spark”) (NASDAQ:SPKE) an affiliated company, successfully closed on its first dropdown acquisition of Oasis Energy, from the parent-level on July 31, 2015. While NG&E intends to offer these customers to Spark, there is no assurance that such a transaction will be completed as it remains subject to negotiation and necessary board approvals.

About National Gas & Electric, LLC

NG&E is wholly owned by W. Keith Maxwell III, who is also the Founder and Chairman of Spark Energy. NG&E is working alongside Spark to develop a strategy that maximizes Spark’s ability to aggressively pursue additional growth through M&A.

About Spark Energy, Inc.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that NG&E or Spark expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Spark’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, neither NG&E nor Spark intend to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

National Gas & Electric, LLC

Michael Tsang, VP of Finance
832-320-2917

Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: National Gas & Electric, LLC

Spark Energy, Inc. Reports Third Quarter 2015 Financial Results

Posted on November 11, 2015October 19, 2021 by Kira Jordan

HOUSTON, Nov. 11, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), today reported financial results for the quarter ended September 30, 2015.

For the third quarter of 2015, Adjusted EBITDA was $5.6 million and Retail Gross Margin was $26.7 million on revenue of $91.3 million, compared to Adjusted EBITDA of $(4.4) million and Retail Gross Margin of $14.6 million for the third quarter of 2014.

“We are very pleased with our third quarter results,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “With enhanced margins in our retail electricity and retail natural gas segments and the addition of our Oasis Energy and CenStar Energy acquisitions, we earned $5.6 million of Adjusted EBITDA and $26.7 million of Retail Gross Margin.

“The CenStar Energy and Oasis Energy acquisitions added over 100,000 residential customer equivalents, bringing our total to over 400,000. In addition to these transactions, we also amended and restated our senior credit facility during the quarter to support our continued growth initiatives.”

Third Quarter 2015 Highlights

$5.6 million in Adjusted EBITDA and $26.7 million in Retail Gross Margin
Closed CenStar Energy and Oasis Energy transactions
Amended and restated existing senior credit facility
Expanded margins in retail electricity and retail natural gas segments
Invested $5.8 million in organic customer acquisitions
Paid second quarter dividend of $0.3625 per share of Class A common stock on September 14, 2015
Declared third quarter dividend of $0.3625 per share of Class A common stock payable on December 14, 2015

Summary Third Quarter 2015 Financial Results

For the quarter ended September 30, 2015, Spark reported Adjusted EBITDA of $5.6 million on $91.3 million of revenue compared to Adjusted EBITDA of $(4.4) million for the quarter ended September 30, 2014. This increase of $10.0 million is primarily attributable to increased retail gross margin in our electricity segment, decreased customer acquisition costs, and our CenStar Energy and Oasis Energy acquisitions, partially offset by increased general and administrative expenses.

For the quarter ended September 30, 2015, Spark reported Retail Gross Margin of $26.7 million compared to Retail Gross Margin of $14.6 million for the quarter ended September 30, 2014. This increase of $12.1 million is primarily attributable to expanded retail electricity unit margins and increased retail electricity volumes. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in the third quarter.

Net income for the quarter ended September 30, 2015 was $5.9 million, or $0.31 per diluted common share compared to net income of $0.4 million, or $0.03 per diluted common share for the quarter ended September 30, 2014.

Liquidity and Capital Resources

(in thousands)	September 30, 2015
Cash and cash equivalents	$	7,355
Senior Credit Facility Working Capital Line Availability⁽¹⁾		13,300
Senior Credit Facility Acquisition Line Availability⁽²⁾		3,775
Total Liquidity	$	24,430
⁽¹⁾ Subject to Senior Credit Facility borrowing base restrictions
⁽²⁾ Subject to Senior Credit Facility covenant restrictions

Conference Call and Webcast

Spark will host a conference call to discuss third quarter 2015 results on Thursday, November 12, 2015 at 10:00 AM Central Time (11:00 AM Eastern).

About Spark Energy, Inc.

Cautionary Note Regarding Forward-Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

changes in commodity prices,
extreme and unpredictable weather conditions,
the sufficiency of risk management and hedging policies,
customer concentration,
federal, state and local regulation,
key license retention,
increased regulatory scrutiny and compliance costs,
our ability to borrow funds and access credit markets,
restrictions in our debt agreements and collateral requirements,
credit risk with respect to suppliers and customers,
level of indebtedness,
changes in costs to acquire customers,
actual customer attrition rates,
actual bad debt expense in non-POR markets,
accuracy of internal billing systems,
ability to successfully navigate entry into new markets,
whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
ability to successfully and efficiently integrate acquisitions into our operations,
competition, and
other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014, our Form 10-Q for the quarter ended June 30, 2015 and in our other public filings and press releases.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
(in thousands)
(unaudited)

	September 30, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	7,355		$	4,359
Restricted cash		–			707
Accounts receivable, net of allowance for doubtful accounts of $3.0 million and $8.0 million as of September 30, 2015 and December 31, 2014		50,284			63,797
Accounts receivable—affiliates		1,447			1,231
Inventory		5,230			8,032
Fair value of derivative assets		129			216
Customer acquisition costs, net		15,260			12,369
Intangible assets—customer acquisitions, net		1,439			486
Acquired customer intangibles—current, net		5,979			–
Prepaid assets		420			1,236
Prepaid assets—affiliates		120			–
Deposits		6,952			10,569
Current deferred tax asset		803			–
Other current assets		4,503			2,987
Total current assets		99,921			105,989
Property and equipment, net		4,422			4,221
Customer acquisition costs		4,618			2,976
Intangible assets—customer acquisitions		1,971			1,015
Acquired customer intangibles		5,979			–
Trademarks		1,226			–
Deferred tax assets		23,196			24,047
Goodwill		18,385			–
Other assets		735			149
Total assets	$	160,453		$	138,397
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	28,731		$	38,210
Accounts payable—affiliates		1,867			1,017
Accrued liabilities		10,409			7,195
Fair value of derivative liabilities		6,437			11,526
Current portion of Senior Credit Facility		31,306			33,000
Other current liabilities		834			1,868
Total current liabilities		79,584			92,816
Long-term liabilities:
Fair value of derivative liabilities		873			478
Payable pursuant to tax receivable agreement—affiliates		20,767			20,767
Long-term portion of Senior Credit Facility		15,919			–
Non-current deferred tax liability		824			–
Convertible subordinated notes to affiliate		6,307			–
Other long-term liabilities		1,605			219
Total liabilities		125,879			114,280
Stockholders’ equity:
Common Stock:

Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,097,193 issued and outstanding at September 30, 2015 and 3,000,000 issued and outstanding at December 31, 2014		31			30

Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at September 30, 2015 and 10,750,000 issued and outstanding at December 31, 2014		108			108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at September 30, 2015 and December 31, 2014		–			–
Additional paid-in capital		11,933			9,296
Retained deficit		(224	)		(775	)
Total stockholders’ equity		11,848			8,659
Non-controlling interest in Spark HoldCo, LLC		22,726			15,458
Total equity		34,574			24,117
Total liabilities and stockholders’ equity	$	160,453		$	138,397

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands, except per share data)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015 ⁽¹⁾			2014
Revenues:
Retail revenues (including retail revenues—affiliates of $0 for both the three months ended September 30, 2015 and 2014, respectively and retail revenues—affiliates of $0 and $2,170 for the nine months ended September 30, 2015 and 2014, respectively)	$	91,812		$	68,358		$	261,996		$	238,453

Net asset optimization (expenses) revenues (including asset optimization revenues—affiliates of $263 and $3,208 for the three months ended September 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $3,382 and $6,450 for the three months ended September 30, 2015 and 2014, respectively and asset optimization revenues—affiliates of $928 and $10,341 for the nine months ended September 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $9,589 and $25,004 for the nine months ended September 30, 2015 and 2014, respectively)		(545	)		(141	)		1,317			1,681
Total Revenues		91,267			68,217			263,313			240,134
Operating Expenses:

Retail cost of revenues (including retail cost of revenues—affiliates of $0 and $0.1 million for the three months ended September 30, 2015 and 2014, respectively and retail cost of revenues-affiliates of less than $0.1 million and $0.1 million for the nine months ended September 30, 2015 and 2014, respectively)		60,967			51,863			176,000			192,371
General and administrative (including general and administrative expense—affiliates of $0 and $0.1 million for the three months ended September 30, 2015 and 2014, respectively and general and administrative expense—affiliates of $0 and $0.1 million for the nine months ended September 30, 2015 and 2014, respectively)		15,493			10,634			43,909			28,494
Depreciation and amortization		7,557			4,113			17,873			10,324
Total Operating Expenses		84,017			66,610			237,782			231,189
Operating income		7,250			1,607			25,531			8,945
Other (expense)/income:
Interest expense		(800	)		(615	)		(1,415	)		(1,150	)
Interest and other income		5			40			326			111
Total other expenses		(795	)		(575	)		(1,089	)		(1,039	)
Income before income tax expense		6,455			1,032			24,442			7,906
Income tax expense		580			613			1,599			777
Net income	$	5,875		$	419		$	22,843		$	7,129
Less: Net income (loss) attributable to non-controlling interests		4,561			(642	)		18,959			6,068
Net income attributable to Spark Energy, Inc. stockholders	$	1,314		$	1,061		$	3,884		$	1,061

Net income attributable to Spark Energy, Inc. per share of Class A common stock
Basic	$	0.42		$	0.35		$	1.27		$	0.35
Diluted	$	0.31		$	0.03		$	1.09		$	0.35

Weighted average shares of Class A common stock outstanding
Basic		3,097			3,000			3,053			3,000
Diluted		14,232			13,750			13,948			3,000

⁽¹⁾ Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
(unaudited)

	Issued Shares of Class A Common Stock	Issued Shares of Class B Common Stock	Issued Shares of Preferred Stock		Class A Common Stock		Class B Common Stock		Additional Paid In Capital		Retained Earnings (Deficit)			Total Stockholders Equity			Non-controlling Interest			Total Equity
Balance at December 31, 2014	3,000	10,750	$	–	$	30	$	108	$	9,296	$	(775	)	$	8,659		$	15,458		$	24,117
Stock based compensation	–	–		–		–		–		1,366		–			1,366			–			1,366
Restricted stock unit vesting	97	–		–		1		–		353		–			354			–			354
Contribution from NuDevco	–	–		–		–		–		129		–			129			–			129
Consolidated net income ⁽¹⁾	–	–		–		–		–		–		3,884			3,884			18,959			22,843
Beneficial conversion feature	–	–		–		–		–		789		–			789			–			789
Distributions paid to Class B non-controlling unit holders	–	–		–		–		–		–		–			–			(11,691	)		(11,691	)
Dividends paid to Class A common shareholders	–	–		–		–		–		–		(3,333	)		(3,333	)		–			(3,333	)
Balance at September 30, 2015	3,097	10,750		–	$	31	$	108	$	11,933	$	(224	)	$	11,848		$	22,726		$	34,574

⁽¹⁾ Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate.

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands)
(unaudited)

	Nine Months Ended September 30,
		2015 ⁽¹⁾			2014

Cash flows from operating activities:
Net income	$	22,843		$	7,129
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense		17,873			10,324
Deferred income taxes		872			638
Stock based compensation		1,992			362
Amortization of deferred financing costs		295			580
Bad debt expense		6,082			3,973
Gain (loss) on derivatives, net		6,118			(262	)
Current period cash settlements on derivatives, net		(15,120	)		7,252
Accretion of discount to subordinated convertible notes to affiliate		21			–
Changes in assets and liabilities:
Decrease in restricted cash		707			–
Decrease in accounts receivable		18,566			9,741
Decrease (increase) in accounts receivable—affiliates		(216	)		6,310
Decrease (increase) in inventory		2,978			(5,338	)
Increase in customer acquisition costs		(17,725	)		(20,366	)
Decrease (increase) in prepaid and other current assets		11,110			(4,658	)
Increase in intangible assets – customer acquisitions		(2,776	)		–
Increase in other assets		(256	)		(146	)
Decrease in accounts payable and accrued liabilities		(14,610	)		(5,890	)
Increase in accounts payable—affiliates		849			851
Increase (decrease) in other current liabilities		(1,534	)		1,465
Increase in other non-current liabilities		1,606			–
Net cash provided by operating activities		39,675			11,965
Cash flows from investing activities:
Purchases of property and equipment		(1,255	)		(2,214	)
Acquisition of CenStar and Oasis net assets		(41,234	)		–
Investment in eRex joint venture		(330	)		–
Net cash used in investing activities		(42,819	)		(2,214	)
Cash flows from financing activities:
Borrowings on credit facilities		52,225			60,280
Payments on credit facilities		(38,000	)		(38,280	)
Member contributions (distributions), net		–			(36,406	)
Contributions from NuDevco		129			–
Proceeds from issuance of Class A common stock		–			50,220
Distributions of proceeds from Offering to affiliate		–			(47,554	)
Payment of Note Payable to NuDevco		–			(50	)
Offering costs		–			(2,667	)
Issuance of convertible subordinated notes to affiliate		7,075			–
Restricted stock vesting		(265	)		–
Payment of dividends to Class A common shareholders		(3,333	)		–
Payment of distributions to Class B unitholders		(11,691	)		–
Net cash provided by (used in) financing activities		6,140			(14,457	)
Increases (decreases) in cash and cash equivalents		2,996			(4,706	)
Cash and cash equivalents—beginning of period		4,359			7,189
Cash and cash equivalents—end of period	$	7,355		$	2,483
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Property and equipment purchase accrual	$	11		$	81
CenStar Earnout accrual	$	500			–
Cash paid during the period for:
Interest	$	1,061		$	484
Taxes	$	157		$	150

⁽¹⁾ Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate.

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands, except per unit operating data)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015		2014
Retail Natural Gas Segment
Total Revenues	$	14,354		$	16,469		$	93,253	$	102,166
Retail Cost of Revenues		10,180			10,235			53,136		77,374
Less: Net Asset Optimization Revenues (Expenses)		(545	)		(141	)		1,317		1,681
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		(3,034	)		(1,475	)		3,241		(2,564	)
Retail Gross Margin—Gas	$	7,753		$	7,850		$	35,559	$	25,675
Volume of Gas (MMBtu)		1,672,120			1,779,610			10,527,078		10,892,362
Retail Gross Margin-Gas ($/MMBtu)	$	4.64		$	4.41		$	3.38	$	2.36
Retail Electricity Segment
Total Revenues	$	76,913		$	51,748		$	170,060	$	137,968
Retail Cost of Revenues		50,787			41,628			122,864		114,997
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		7,201			3,351			3,526		(1,548	)
Retail Gross Margin—Electricity	$	18,925		$	6,769		$	43,670	$	24,519
Volume of Electricity (MWh)		719,758			447,729			1,519,011		1,201,345
Retail Gross Margin—Electricity ($/MWh)	$	26.29		$	15.12		$	28.75	$	20.41

Reconciliation of GAAP to Non-GAAP Measures

Adjusted EBITDA

We define “Adjusted EBITDA” as EBITDA less (i) customer acquisition costs incurred in the current period, (ii) net gain (loss) on derivative instruments, and (iii) net current period cash settlements on derivative instruments, plus (iv) non-cash compensation expense and (v) other non-cash operating items. EBITDA is defined as net income before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that were issued under our long-term incentive plan.

We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our liquidity and financial condition and results of operations and that Adjusted EBITDA is also useful to investors as a financial indicator of a company’s ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our condensed combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following, among other measures:

our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
the ability of our assets to generate earnings sufficient to support our proposed cash dividends; and
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt.

Retail Gross Margin

We define retail gross margin as operating income plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues, (ii) net gains (losses) on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. Retail gross margin is included as a supplemental disclosure because it is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity business by removing the impacts of our asset optimization activities and net non-cash income (loss) impact of our economic hedging activities. As an indicator of our retail energy business’ operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income, its most directly comparable financial measure calculated and presented in accordance with GAAP.

The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income. Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income, net cash provided by operating activities, or operating income. Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider Adjusted EBITDA or Retail Gross Margin in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude some, but not all, items that affect net income and net cash provided by operating activities, and are defined differently by different companies in our industry, our definition of Adjusted EBITDA and Retail Gross Margin may not be comparable to similarly titled measures of other companies.

The following tables present a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities for each of the periods indicated.

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
		2015		2014			2015			2014
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$	5,875	$	419		$	22,843		$	7,129
Depreciation and amortization		7,557		4,113			17,873			10,324
Interest expense		800		615			1,415			1,150
Income tax expense		580		613			1,600			777
EBITDA		14,812		5,760			43,731			19,380
Less:
Net, Gains (losses) on derivative instruments		61		(1,178	)		(6,118	)		262
Net, Cash settlements on derivative instruments		4,163		3,004			12,887			(7,252	)
Customer acquisition costs		5,825		8,698			17,725			20,366
Plus:
Non-cash compensation expense		838		362			1,374			362
Adjusted EBITDA	$	5,601	$	(4,402	)	$	20,611		$	6,366

	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$	(15,887	)	$	(13,693	)	$	39,675		$	11,965
Amortization of deferred financing costs		(194	)		(355	)		(295	)		(580	)
Allowance for doubtful accounts and bad debt expense		(1,903	)		(1,946	)		(6,082	)		(3,973	)
Interest expense		800			615			1,415			1,150
Income tax expense		580			613			1,599			777
Changes in operating working capital
Accounts receivable, prepaids, current assets		(3,677	)		2,505			(29,460	)		(11,393	)
Inventory		2,103			5,649			(2,978	)		5,338
Accounts payable and accrued liabilities		21,690			1,277			13,761			5,039
Other		2,089			933			2,976			(1,957	)
Adjusted EBITDA	$	5,601		$	(4,402	)	$	20,611		$	6,366

The following table presents a reconciliation of Retail Gross Margin to operating income for each of the periods indicated.

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Reconciliation of Retail Gross Margin to Operating Income:
Operating income	$	7,250		$	1,607		$	25,531		$	8,945
Depreciation and amortization		7,557			4,113			17,873			10,324
General and administrative		15,493			10,634			43,909			28,494
Less:
Net asset optimization revenues (expenses)		(545	)		(141	)		1,317			1,681
Net, Gains (losses) on non-trading derivative instruments		132			(1,163	)		(5,876	)		5,847
Net, Cash settlements on non-trading derivative instruments		4,035			3,039			12,643			(9,959	)
Retail Gross Margin	$	26,678		$	14,619		$	79,229		$	50,194

Contact: Spark Energy, Inc.

Investors: Andy Davis, 832-200-3727

Media: Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

Spark Energy, Inc. to Present Third Quarter 2015 Financial Results on Thursday, November 12, 2015

Posted on October 27, 2015October 19, 2021 by Kira Jordan

HOUSTON, Oct. 27, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it plans to present its Third Quarter 2015 financial results in a conference call and webcast on Thursday, November 12, 2015 at 10:00 AM Central (11:00 AM Eastern).

About Spark Energy, Inc.

Contact:  Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

Spark Energy, Inc. Announces Third Quarter Dividend

Posted on October 22, 2015October 19, 2021 by Kira Jordan

HOUSTON, Oct. 22, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (the “Company”), announced today that its Board of Directors has declared a quarterly cash dividend for the third quarter of 2015 in the amount of $0.3625 per share of Class A common stock. This amount represents an annualized dividend of $1.45 per share. The dividend will be paid on December 14, 2015 to holders of record of the Class A common stock on November 30, 2015.

“Our third quarter was a significant one, as we closed on two transactions, CenStar Energy and Oasis Energy, and also amended and restated our credit facility,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “We are very pleased with our third quarter financial results, especially when you factor in the seasonal nature of our business.”

About Spark Energy, Inc.

Contact:  Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

Spark Energy, Inc. Reports Second Quarter 2015 Financial Results

Posted on August 12, 2015October 19, 2021 by Kira Jordan

HOUSTON, Aug. 12, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), today reported financial results for the quarter ended June 30, 2015.

For the second quarter of 2015, Adjusted EBITDA was $4.6 million and Retail Gross Margin was $23.1 million on revenue of $65.4 million, compared to Adjusted EBITDA of $1.4 million and Retail Gross Margin of $17.9 million for the second quarter of 2014.

“The second quarter yielded positive results for us, both organically and from an M&A perspective,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “Our retail gross margin and Adjusted EBITDA were enhanced as a result of lower supply costs across several of our markets. We added approximately 25,000 customers from our Entrust transaction that, along with the Connecticut customers we acquired at the end of last year, will continue to be accretive to Adjusted EBITDA.

“More recently, we closed on the CenStar Energy and Oasis Energy transactions, and also amended and restated our credit facility in order to provide us with the capacity to acquire companies and large books of customers in order to continue to execute on our strategy to grow the business. The Oasis and CenStar acquisitions added over 100,000 residential customer equivalents, bringing our total to over 400,000. In addition, these acquisitions enable us to access twenty new markets to support our continued organic growth efforts.”

Second Quarter 2015 Highlights

$4.6 million in Adjusted EBITDA and $23.1 million in Retail Gross Margin
Enhanced margins in retail electricity and retail natural gas segments
Strong cash flow during the quarter allowed us to reduce the working capital facility loan balance by $11.0 million
Invested $6.2 million in organic customer acquisitions
Paid first quarter dividend of $0.3625 per share of Class A common stock on June 15, 2015
Declared second quarter dividend of $0.3625 per share of Class A common stock payable on September 14, 2015

Strategic Developments

Amended and restated existing senior credit facility on July 8
Closed CenStar Energy and Oasis Energy transactions in July, bringing our total residential customer equivalent count to over 400,000

Summary Second Quarter 2015 Financial Results

For the quarter ended June 30, 2015, Spark reported Adjusted EBITDA of $4.6 million on $65.4 million of revenue compared to Adjusted EBITDA of $1.4 million for the quarter ended June 30, 2014. This increase of $3.2 million is primarily attributable to increased retail gross margin across both our electricity and natural gas segments, partially offset by increased general and administrative expenses, including increased billing and other variable costs associated with increased customer count and increased costs associated with being a public company.

For the quarter ended June 30, 2015, Spark reported Retail Gross Margin of $23.1 million compared to Retail Gross Margin of $17.9 million for the quarter ended June 30, 2014. This increase of $5.2 million is primarily attributable to higher retail natural gas and retail electricity unit margins. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in the second quarter.

Net income and EPS for the quarter ended June 30, 2015 were $4.6 million and $0.23, respectively. An unrealized gain on the hedge portfolio valuation of our future supply positions positively impacted net income and EPS by $0.3 million and $0.02, respectively. Net income for the quarter ended June 30, 2014 was $0.2 million and contained an unrealized loss on the hedge portfolio valuation of $(4.5) million.

Liquidity and Capital Resources

(in thousands)	June 30, 2015
Cash and cash equivalents	$ 4,237
Senior Credit Facility Availability⁽¹⁾	50,155
Total Liquidity	$ 54,392
⁽¹⁾ Subject to Senior Credit Facility borrowing base restrictions

Conference Call and Webcast

Spark will host a conference call to discuss second quarter 2015 results on Thursday, August 13, 2015 at 10:00 AM Central Time (11:00 AM Eastern).

About Spark Energy, Inc.

Cautionary Note Regarding Forward-Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

changes in commodity prices,
extreme and unpredictable weather conditions,
the sufficiency of risk management and hedging policies,
customer concentration,
federal, state and local regulation,
key license retention,
increased regulatory scrutiny and compliance costs,
our ability to borrow funds and access credit markets,
restrictions in our debt agreements and collateral requirements,
credit risk with respect to suppliers and customers,
level of indebtedness,
changes in costs to acquire customers,
actual customer attrition rates,
actual bad debt expense in non-POR markets,
accuracy of internal billing systems,
ability to successfully navigate entry into new markets,
whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
ability to successfully and efficiently integrate acquisitions into our operations,
competition, and
other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014.

You should review the risk factors and other matters disclosed throughout our Report on Form 10-K for the year ended December 31, 2014 and the Form 10-Q for the quarter ended June 30, 2015, both of which are filed with the Securities and Exchange Commission, which could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2015 AND DECEMBER 31, 2014
(in thousands)
(unaudited)

	June 30, 2015	December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$ 4,237	$ 4,359
Restricted cash	—	707
Accounts receivable, net of allowance for doubtful accounts of $4.1 million and $8.0 million as of June 30, 2015 and December 31, 2014, respectively	40,011	63,797
Accounts receivable—affiliates	534	1,231
Inventory	2,945	8,032
Fair value of derivative assets	924	216
Customer acquisition costs, net	14,514	12,369
Intangible assets – customer acquisitions, net	1,421	486
Prepaid assets	789	1,236
Prepaid assets—affiliates	173	—
Deposits	5,335	10,569
Other current assets	2,615	2,987
Total current assets	73,498	105,989
Property and equipment, net	4,448	4,221
Fair value of derivative assets	—	—
Customer acquisition costs	4,450	2,976
Intangible assets – customer acquisitions	2,292	1,015
Deferred tax assets	23,770	24,047
Other assets	82	149
Total Assets	$ 108,540	$ 138,397
Liabilities and Member’s Equity
Current liabilities:
Accounts payable	$ 26,504	$ 38,210
Accounts payable—affiliates	789	1,017
Accrued liabilities	7,032	7,195
Fair value of derivative liabilities	8,825	11,526
Note payable	9,000	33,000
Other current liabilities	673	1,868
Total current liabilities	52,823	92,816
Long-term liabilities:
Fair value of derivative liabilities	531	478
Payable pursuant to tax receivable agreement—affiliates	20,767	20,767
Other long-term liabilities	1,553	219
Total liabilities	75,674	114,280
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,097,193 issued and outstanding at June 30, 2015 and 3,000,000 issued and outstanding at December 31, 2014	31	30
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at June 30, 2015 and 10,750,000 issued and outstanding at December 31, 2014	108	108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at June 30, 2015 and December 31, 2014	—	—
Additional paid-in capital	10,494	9,296
Retained earnings (deficit)	132	(775)
Total stockholders’ equity	10,745	8,659
Non-controlling interest in Spark HoldCo, LLC	22,101	15,458
Total equity	32,866	24,117
Total Liabilities and Stockholders’ Equity	$ 108,540	$ 138,397


SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except per share data)
(unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Revenues:
Retail revenues (including retail revenues—affiliates of $0 and $681 for the three months ended June 30, 2015 and 2014, respectively and retail revenues—affiliates of $0 and $2,170 for the six months ended June 30, 2015 and 2014, respectively)	$ 65,500	$ 65,743	$ 165,375	$ 170,095
Net asset optimization (expenses) revenues (including asset optimization revenues—affiliates of $176 and $4,634 for the three months ended June 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $3,114 and $10,654 for the three months ended June 30, 2015 and 2014, respectively and asset optimization revenues—affiliates of $665 and $7,134 for the six months ended June 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $6,207 and $18,554 for the six months ended June 30, 2015 and 2014, respectively)	(67)	197	1,862	1,821
Total Revenues	65,433	65,940	167,237	171,916
Operating Expenses:
Retail cost of revenues (including retail cost of revenues—affiliates of less than $0.1 million for both the three months and six months ended June 30, 2015 and 2014)	42,120	52,387	111,207	140,508
General and administrative (including general and administrative expense—affiliates of $0 and $6 for the three months ended June 30, 2015 and 2014, respectively and general and administrative expense—affiliates of $0 and $12 million for the six months ended June 30, 2015 and 2014, respectively)	12,978	9,747	27,683	17,860
Depreciation and amortization	5,231	3,252	9,508	6,211
Total Operating Expenses	60,329	65,386	148,398	164,579
Operating income	5,104	554	18,839	7,337
Other (expense)/income:
Interest expense	(207)	(222)	(588)	(535)
Interest and other income	187	1	322	71
Total other expenses	(20)	(221)	(266)	(464)
Income before income tax expense	5,084	333	18,573	6,873
Income tax expense	459	132	1,019	164
Net income	$ 4,625	$ 201	$ 17,554	$ 6,709
Less: Net income attributable to non-controlling interests	3,917	—	14,437	—
Net income attributable to Spark Energy, Inc. stockholders	$ 708	$ 201	$ 3,117	$ 6,709

Net income attributable to Spark Energy, Inc. per share of Class A common stock
Basic	$ 0.23		$ 1.03
Diluted	$ 0.23		$ 0.83

Weighted average shares of Class A common stock outstanding
Basic	3,062		3,031
Diluted	3,062		13,781

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(in thousands)
(unaudited)

	Issued Shares of Class A Common Stock	Issued Shares of Class B Common Stock	Issued Shares of Preferred Stock	Class A Common Stock	Class B Common Stock	Additional Paid In Capital	Retained Earnings (Deficit)	Total Stockholders Equity	Non-controlling Interest	Total Equity
Balance at 12/31/14:	3,000	10,750	$ —	$ 30	$ 108	$ 9,296	$ (775)	$ 8,659	$ 15,458	$ 24,117
Stock based compensation	—	—	—	—	—	716	—	716	—	716
Restricted stock unit vesting	97	—	—	1	—	353		354		354
Contribution from NuDevco	—	—	—	—	—	129	—	129	—	129
Consolidated net income	—	—	—	—	—	—	3,117	3,117	14,437	17,554
Distributions paid to Class B non-controlling unit holders	—	—	—	—	—	—	—	—	(7,794)	(7,794)
Dividends paid to Class A common shareholders	—	—	—	—	—	—	(2,210)	(2,210)	—	(2,210)
Balance at 6/30/15:	3,097	10,750	—	$ 31	$ 108	$ 10,494	$ 132	$ 10,765	$ 22,101	$ 32,866

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands)
(unaudited)

	Six Months Ended June 30,
	2015	2014

Cash flows from operating activities:
Net income	$ 17,554	$ 6,709
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense	9,508	6,211
Deferred income taxes	277	—
Stock based compensation	1,159	—
Amortization of deferred financing costs	101	225
Bad debt expense	4,179	2,027
Gain (loss) on derivatives, net	5,360	(1,440)
Current period cash settlements on derivatives, net	(8,547)	10,256
Changes in assets and liabilities:
Decrease in restricted cash	707	—
Decrease in accounts receivable	19,608	12,266
Decrease in accounts receivable—affiliates	698	6,754
Decrease in inventory	5,087	311
Increase in customer acquisition costs	(11,809)	(11,668)
Decrease (increase) in prepaid and other current assets	5,610	(5,250)
Increase in intangible assets – customer acquisitions	(2,720)	—
Decrease in other assets	65	58
Decrease in accounts payable and accrued liabilities	(12,087)	(3,895)
Increase (decrease) in accounts payable—affiliates	(228)	261
Increase (decrease) in other current liabilities	(1,195)	2,833
Increase in other non-current liabilities	1,553	—
Net cash provided by operating activities	34,880	25,658
Cash flows from investing activities:
Purchases of property and equipment	(857)	(1,404)
Net cash used in investing activities	(857)	(1,404)
Cash flows from financing activities:
Borrowings on notes payable	6,000	48,550
Payments on notes payable	(30,000)	(35,000)
Contributions from NuDevco	129	—
Member contributions (distributions), net	—	(43,506)
Restricted stock vesting	(270)	—
Payment of dividends to Class A common shareholders	(2,210)	—
Payment of distributions to Class B unitholders	(7,794)	—
Net cash used in financing activities	(34,145)	(29,956)
Decreases in cash and cash equivalents	(122)	(5,702)
Cash and cash equivalents—beginning of period	4,359	7,189
Cash and cash equivalents—end of period	$ 4,237	$ 1,487
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Property and equipment purchase accrual	$ 179	$ —
Cash paid during the period for:
Interest	$ 598	$ 395
Taxes	$ 150	$ 150


SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except per unit operating data)
(unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Retail Natural Gas Segment
Total Revenues	$ 21,361	$ 23,169	$ 78,716	$ 85,697
Retail Cost of Revenues	9,375	16,634	42,842	67,138
Less: Net Asset Optimization Revenues (Expenses)	(67)	197	1,862	1,821
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements	2,622	(780)	6,267	(1,088)
Retail Gross Margin—Gas	$ 9,431	$ 7,118	$ 27,745	$ 17,826
Volume of Gas (MMBtu)	2,262,749	2,519,172	8,826,794	9,112,752
Retail Gross Margin-Gas ($/MMBtu)	$ 4.17	$ 2.83	$ 3.14	$ 1.96
Retail Electricity Segment
Total Revenues	44,072	42,771	88,521	86,219
Retail Cost of Revenues	32,745	35,753	68,365	73,370
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements	(2,335)	(3,755)	(3,066)	(4,900)
Retail Gross Margin—Electricity	$ 13,662	$ 10,773	$ 23,222	$ 17,749
Volume of Electricity (MWh)	378,403	369,341	751,254	753,616
Retail Gross Margin—Electricity ($/MWh)	$ 36.10	$ 29.17	$ 30.91	$ 23.55

Reconciliation of GAAP to Non-GAAP Measures

Adjusted EBITDA

We define “Adjusted EBITDA” as EBITDA less (i) customer acquisition costs incurred in the current period, (ii) net gain (loss) on derivative instruments, and (iii) net current period cash settlements on derivative instruments, plus (iv) non-cash compensation expense and (v) other non-cash operating items. EBITDA is defined as net income before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. For example, our Adjusted EBITDA is lower in years of customer growth reflecting larger customer acquisition spending. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan.

We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our liquidity and financial condition and results of operations and that Adjusted EBITDA is also useful to investors as a financial indicator of a company’s ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our condensed combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following, among other measures:

our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
the ability of our assets to generate earnings sufficient to support our proposed cash dividends; and
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt.

Retail Gross Margin

The following tables present a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities for each of the periods indicated.


APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$ 4,625	$ 201	$ 17,554	$ 6,709
Depreciation and amortization	5,231	3,252	9,508	6,211
Interest expense	207	222	588	535
Income tax expense	459	132	1,019	164
EBITDA	10,522	3,807	28,669	13,619
Less:
Net, Gains (losses) on derivative instruments	(4,055)	(4,019)	(5,360)	1,440
Net, Cash settlements on derivative instruments	4,357	(59)	8,547	(10,256)
Customer acquisition costs	6,180	6,441	11,809	11,668
Plus:
Non-cash compensation expense	609	—	1,159	—
Adjusted EBITDA	$ 4,649	$ 1,444	$ 14,832	$ 10,767


	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$ 15,634	$ 19,448	$ 34,880	$ 25,658
Amortization of deferred financing costs	(51)	(112)	(101)	(225)
Bad debt expense	(1,232)	(1,462)	(4,179)	(2,027)
Interest expense	207	222	588	535
Income tax expense	459	132	1,019	164
Changes in operating working capital
Accounts receivable, prepaids, current assets	(19,120)	(40,878)	(23,903)	(13,770)
Inventory	2,434	4,011	(5,087)	(311)
Accounts payable and accrued liabilities	6,504	21,969	12,315	3,634
Other	(186)	(1,886)	(700)	(2,891)
Adjusted EBITDA	$ 4,649	$ 1,444	$ 14,832	$ 10,767

The following table presents a reconciliation of Retail Gross Margin to operating income for each of the periods indicated.


APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Reconciliation of Retail Gross Margin to Operating Income:
Operating income	$ 5,104	$ 554	$ 18,839	$ 7,337
Depreciation and amortization	5,231	3,252	9,508	6,211
General and administrative	12,978	9,747	27,683	17,860
Less:
Net asset optimization revenues (expenses)	(67)	197	1,862	1,821
Net, Gains (losses) on non-trading derivative instruments	(4,041)	(4,438)	(5,241)	7,010
Net, Cash settlements on non-trading derivative instruments	4,328	(97)	8,442	(12,998)
Retail Gross Margin	$ 23,093	$ 17,891	$ 50,967	$ 35,575

CONTACT: Spark Energy, Inc.
         Investors:
         Andy Davis, 832-200-3727
         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy

Spark Energy, Inc. Announces Closing of Oasis Energy Transaction

Posted on August 4, 2015October 19, 2021 by Kira Jordan

HOUSTON, Aug. 4, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today it has closed its previously announced acquisition of Oasis Energy. A retail energy company with approximately 40,000 natural gas and electricity customers in six states, Oasis Energy brings seven new utilities to Spark, providing additional organic growth opportunities.

The purchase price is $20.0 million, subject to working capital adjustments. As part of the transaction, the Company has issued a $5.0 million convertible subordinated note with a term of five years and an annual interest rate of 5% to the seller, an affiliate of Spark’s founder and majority shareholder. The convertible subordinated note is convertible into shares of Class B common stock at a conversion price of $14.00 following an 18-month holding period.

A special committee of the Board of Directors, consisting solely of independent directors, approved this transaction, which is part of Spark’s strategy to accelerate the growth of its customer base through acquisitions with the help of its founder. Management believes that the acquisition will immediately be accretive to Spark’s Adjusted EBITDA and will further secure Spark’s dividend. Spark intends to operate the business as a standalone brand given Oasis’s proven ability to realize strong gross margins through pricing and product mix.

“We are very excited to have closed the Oasis Energy transaction,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “In addition to purchasing a strong customer portfolio, we are also receiving the benefit of a solid brand, established vendor relationships, and the ability to grow in several new markets as we expand our footprint.”

Conference Call and Webcast

Spark will host a conference call to discuss Second Quarter 2015 financial results on Thursday, August 13, 2015 at 10:00 AM Central Time (11:00 AM Eastern).

About Spark Energy, Inc.

CONTACT: Spark Energy, Inc.
         Investors:
         Andy Davis, 832-200-3727
         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy

Spark Energy, Inc. to Present Second Quarter 2015 Financial Results on Thursday, August 13, 2015

Posted on July 28, 2015October 19, 2021 by Kira Jordan

HOUSTON, July 28, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it plans to present its Second Quarter 2015 financial results in a conference call and webcast on Thursday, August 13, 2015 at 10:00 AM Central (11:00 AM Eastern).

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 16 states and serves 59 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

CONTACT: Spark Energy, Inc.

         Investors:
         Andy Davis, 832-200-3727

         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy